CSIL World Report

FURNITURE OUTLOOK for
LATIN AMERICA
and THE CARIBBEAN

by Paola Govoni, CSIL Centre for Industrial Studies, Milan – Italy

With about 600 million inhabitants
and a per capita GNP of about
US$ 10,000, the countries of
Latin America and the Caribbean
have a total household
consumption of more than US$ 300 billion. Seven
countries have a total GNP above US$ 100 billion:
Brazil, Mexico, Argentina, Venezuela, Colombia,
Chile and Peru.

4% OF WORLD FURNITURE CONSUMPTION
The countries of Latin America and the Caribbean
account for about 4% of world furniture
consumption in 2014, with a per capita furniture
consumption of 28 US$ against a world average of
about 85 US$. Apparent furniture consumption (at
production prices excluding retail markup) amounts
to about US$ 17.3 billion.

South America’s largest furniture consuming country
is Brazil, followed at a distance by Venezuela, Chile,
Peru, Colombia and Argentina. Brazil is a major
consumer at a world level, ranking in 13th position
among world consumers.

In Central America the main furniture consuming
country is Mexico, with a furniture consumption (at
production prices, excluding retail markup) of more
than US$ 2 billion.

The furniture sector in the Caribbean islands is
important mostly for furniture for hotels and the
tourism industry in general. The main consuming
countries are the Dominican Republic, Cuba, the
Bahamas, Trinidad and Tobago and Jamaica.

Import is about 23% of the furniture consumed.
About 77% of the total furniture market is supplied
by local manufacturers. The major importing
countries are Mexico, Brazil and Chile with furniture
imports exceeding US$ 400 million.

Exports amount to about US$ 3.2 billion. The main
exporting countries are Mexico, Brazil, Uruguay and
Colombia.

URBAN AREAS AND THEIR IMPLICATIONS FOR FURNITURE CONSUMPTION

In Latin America and the Caribbean there are 63 metropolitan
areas with a population of more than 1 million inhabitants in 2015.
Urbanisation continues to be rapid, and large urban areas will be
major engine of economic growth, with important implications for
future increases in furniture consumption.

Import penetration (i.e. the imports/consumption ratio) is high in
Central America and in the Caribbean, while it is still very low in
South America, mainly as a consequence of the fact that Brazil is a
very closed market. Furniture imports in countries of Latin America
and the Caribbean grew from about US$ 3 billion in 2010 to US$
4 billion in 2014.

Furniture consumption in Latin America and the Caribbean is in
a phase of stagnation in 2015 and 2016, mainly because of the
unfavourable market conditions in Brazil and in Venezuela. Among
the largest markets, the more promising in terms of growth in the
next two years are Mexico, Chile, Peru and Colombia.

HIGHLIGHTS ON MAIN MARKETS
Total furniture production in countries of Latin America and
the Caribbean is worth about US$ 16.5 billion. Almost 70% of
production in the area takes place in Brazil and Mexico.

Brazil is the 13th largest furniture market in the world and the
first market in Latin America. Brazil ranks 11th in the world as a
furniture producer, with a productive system composed by a large
majority of micro and small enterprises and some big local players,
for a total of around 19,700 companies and about 322,000
workers in production. Brazil ranks 33rd as a furniture exporter
and 30th as a furniture importer at a world level. Main destinations
of the Brazilian furniture exports are: the United States (18%), the
United Kingdom (14.5%), Argentina (12.1%), Angola (6.5%) and
Peru (5.9%). Furniture import penetration, although increasing over
recent years, is still low (less than 10%), with the market share
of Chinese products increasing fast. Origin of furniture imports is
China (32.2%), the U.S. (9.1%), South Korea (6.1%), Mexico (6.1%)
and Italy (5.0%).

Mexico is the second producer, the second largest consumer and
the leading exporter and importer in the Latin American and the
Caribbean area. At a world level (among 70 countries monitored by
CSIL) Mexico stands out as the 11th exporter and 20th producer.
Mexican furniture production accounts for around 18% of the
Latin American and the Caribbean furniture production and 12%
of total Latin American and Caribbean furniture consumption.
Exports account for 66% of the total exports of the area. Exports/
production ratio increased from 45% in 2009 to 70% in 2014. It is
open to furniture imports, which have been increasing fast over the
years. Main destinations of Mexican exports are: the U.S. (75.4%),
and Canada (11,1%). Origin of furniture imports is China (40.2%),
the U.S. (33.3%), Italy (7.4%), Spain (4.9%) and Canada (2.2%).
Argentina ranks 7th as furniture producer in Latin America. Furniture
import penetration is low (less than 20%), but the market share of
Chinese products is increasing fast. China and Brazil are the major
suppliers to the Argentine market. After suffering for the crisis in 2009, import flows from the two countries started growing again
in 2010, but while imports from China have been increasing fast,
those from Brazil have been strongly declining. Main destinations
of Argentine exports are: Uruguay, Chile, Paraguay, Brazil, and
Colombia. Origin of furniture imports is China (64.4%), Brazil
(14.1%), the U.S. (2.9%), Spain (2.5%) and Italy (1.8%).

In Chile furniture import penetration is above the world average.
Imported goods satisfy 42% of total furniture consumption and over
the period 2009-2014 furniture imports increased by an average
annual rate of 21%. Main suppliers of Chilean furniture imports are:
China (55.4%), Malaysia (7.8%), Brazil (7.7%), the U.S. (4.8%) and
Italy (2.7%), which together provide around 80% of total furniture
imports. The bulk of Chilean furniture production is destined for
the domestic market; export propensity among Chilean firms is still
very low. Only 3% of total furniture production was exported in
2014, for a value of US$ 20 million.

Colombia is a fast growing market in Latin America with potentials
for both domestic and foreign markets. It ranks 44th in CSIL
database of world furniture market, with an average annual growth
rate of furniture consumption of about 20% between 2009 and
2012 and expected growth for consumption of 2% in 2016. It
ranks 49th as a furniture producer, 53th as an exporter and 56th as
an importer. Main destinations of Colombian exports are: Panama,
the U.S., Venezuela, Ecuador, and Peru. Origin of furniture imports
is mainly China (51%), the U.S. (8.1%), Italy (6.3%), Brazil (5.9%)
and Mexico (5.8%).

TPP: NEW RULES FOR GLOBAL TRADE
A trade agreement among 12 Pacific Rim countries has been
signed on 4 February 2016 in Auckland, New Zealand. The TRANSPACIFIC
PARTNERSHIP (TPP) is an expansion of the former Trans-
Pacific Strategic Economic Partnership Agreement (TPSEP) signed
in 2005 by Brunei, Chile, New Zealand and Singapore. 8 additional
countries joined the agreement in 2016: Australia, Canada, Japan,
Malaysia, Mexico, Peru, the United States and Vietnam.

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